Kettle controls group’s Chinese operations back to full production

Production at its Chinese manufacturing site has returned to normal, said Strix Group, the Isle of Man-based kettle safety controls manufacturer and supplier.

China was the epicentre late last year for the outbreak of the current coronavirus, or COVID-19 currently impacting world health.

Announcing its final results for the year to December 31, 2019, today, Strix chief executive Mark Bartlett said: “We have been extremely proud of the response of our leaders to the unprecedented situation as a result of COVID-19, with minimal impact to date.

“The group’s manufacturing operations in China have recovered with a c.100% production capacity and operational supply chain which is sufficient to meet customer demand.

“The Group will continue to focus on a prudent allocation of capital and be vigilant about the broader implications of COVID-19 which will include daily monitoring of consumer and brand demand.

“As a result, the group is working on several strategic initiatives, including new products and efficiency measures, to minimise the impact to full year forecasts.”

Chairman, Gary Lamb, added: “The board is closely monitoring the development of COVID-19 and has put in place a number of preventative measures within the Guangzhou manufacturing facility.

“In order to provide a safe and healthy working environment for our employees, the group has made medical supplies such as face masks, thermometers and sterilisers readily available. We have also used our newly-acquired HaloSource product within the sterilisation zone at the factory entrance to enhance our preventative measures.

“Globally, the group is adhering to the latest travel advice provided by the World Health Organisation.

“The impact on Strix has thus far been limited with our Guangzhou manufacturing now operating at 96% resource levels, having only been closed for one extra week in line with government-imposed policy to extend the mandatory Chinese New Year holiday.

“All of our top 20 largest OEM (original equipment manufacturers) customers have resumed production and are continuing to increase capacity.

“We expect the kettle control market to be resilient but we are closely following the effect on global consumer demand.”

Results for the year showed Strix grew revenues by 3.3% to £96.9m, while pre-tax profits of £30.2m represented a 3.4% improvement on the previous year.

The total dividend per share has risen by 10% to 7.7p per share.

The group said it has available liquidity, consisting of cash and undrawn facilities, of £22.7m.

It maintained its global market value share of the kettle controls market at around 54%.

A construction contract for the new factory within Zengcheng district in China was signed on September 2, 2019 for £13.9m. The total factory project is on target to be fully operational by August 2021 and remains on budget at the previously guided £20m.

Mark Bartlett said: “Following on from our successful results in 2018, we are pleased to report another year of solid trading performance in 2019.

“We continue to focus on our strategic priorities which has enabled us to retain our c.54% global market value share amidst a challenging geo-political climate.

“During the year, we have continued to execute on our organic and inorganic strategy for growth through the acquisition of HaloSource in March 2019 and the construction of a new factory in China, where we have signed a £13.9m construction contract and commenced construction.

“We remain committed to consumer safety where we continue to initiate regulatory enforcement actions to remove unsafe and poor quality products from the market. Defence of intellectual property remains a core function of our business which is important in achieving the group’s growth potential.”

He added: “We have maintained our focus on manufacturing and production quality which has led to a 29% improvement in customer quality parts per million. The group continues to invest in automation and lean initiatives which will further enhance production efficiency and quality.

“The group’s high ROCE and high proportion of cash in advance payment terms limit the risk of non-payment and working capital fluctuations. This, along with a robust balance sheet, provide the board with continued confidence in the group’s future growth prospects.”